THE RELATIONSHIP BETWEEN OWNERSHIP STRUCTURE AND FIRM PERFORMANCE: EVIDENCE FROM NIGERIAN LISTED COMPANIES
Ioraver N. Tsegba
Benue State University, Nigeria
Benue State University, Makurdi, Nigeria
This paper examines the relationship between ownership structure and performance from the perspective of listed Nigerian companies. Although there is a large literature on the relationship between ownership structure, corporate governance and firm performance, there is no consensus about the nature of this relation. This situation is prominent in emerging countries, like Nigeria, which have embarked on wholesale privatization of state-owned enterprises (SOEs) as part of their economic reform agenda and, in the process, adopted a variety of ownership structures with significant implications for corporate governance and, consequently, firm performance. The sample consists of 73 companies listed on the Nigerian Stock Exchange, covering the period 2001 to 2007. The postulated hypotheses were tested, using Ordinary Least Squares (OLS) analysis. The empirical results provide evidence that dominant shareholding, concentrated ownership, and foreign ownership structures have no significant effect on firm performance. We also provide evidence which suggests that insider ownership is inversely related to firm performance. The broad conclusions from this study raise two policy implications for Nigeria. First, since ownership structures such as dominant shareholding, concentrated ownership, and foreign ownership have no significant effect on firm performance, government emphasis on them is misplaced. Second, insider ownership of Nigerian firms is to be monitored closely by shareholders due to the adverse effect it has on firm performance.
Key words: Corporate Governance, Ownership Structure, Dominant Shareholder, Concentrated Ownership, Insider Ownership, Foreign Ownership, Firm Performance, State-owned Enterprises, Nigeria.
JEL codes: G10, G14